The Indian real estate sector has been transformed significantly over the last decade. This transformation has been accelerated further by the central government’s reformative steps to bring ‘Acche Din’ to the realty sector.
Whether good days have really come is debatable – but certainly, we now have a new regulatory environment with the implementation of several policies: The important ones are:
- The Real Estate (Regulation and Development) Act, 2016 (RERA)
- Goods and Services Tax (GST)
- Real Estate Investment Trusts (REITs)
- Benami Transactions (Prohibition) Amendment Act, 2016, and
- Pradhan Mantri Awas Yojana (PMAY)
Let us remember that all these policy changes have all happened over the last few years. They have literally given a new lease of life to the sector.
It is doubtful that the Housing for All vision will come to pass in the next few years. Other ambitious projects like 100 Smart Cities, AMRUT cities, and industrial corridors, including Delhi-Mumbai Industrial Corridor (DMIC), also do not show any actual results.
So, if Housing for All does not happen by 2022, what can we logically hope for in the years to come?
Reducing India’a Carbon Footprint
One of the most critical tasks the government had set for itself was to reduce India’s carbon emissions – if not to become carbon neutral, then at least to more manageable levels. Studies indicate that India annually produces no less than 3 Gt (gigatonnes) of greenhouse gases each year.
This amounts to approximately 2.5 tonnes per Indian citizen. While it is lower than the world average, it is still true that India produces about 7% of the entire planet’s greenhouse gases.
Real estate contributes massively to this burden, and the collective task before Indian developers and the government is to make green buildings the new norm. Green real estate is a significant step towards environmental sustainability. And this is only one of many ways in which the government can help the real estate industry.
Better Cooperation and Collaboration
With trillion-dollar investments required for the all-around growth of the sector, it is imperative that the government and industry players concur, cooperate and address the key challenges and issues plaguing the sector. Achieving such a level of collaboration is one of the main tasks which the country’s most eminent real estate developer associations CREDAI has set itself and pursues constantly.
Collaboration between the government and developers is crucial. But in some areas, the real estate industry relies more on the government. Here are five of the main areas –
- Build sound infrastructure: Most city centers have become congested due to multiple developments over the years, so new economic centers must be built on the peripheries to decongest our cities. We need fast-tracked social and physical infrastructure development in peripheral areas to make them more habitable and economically viable. (This will also help keep property prices under control and discourage speculation).
- Streamline project approval processes and statutory taxes: Year after year, India’s real estate industry players demand ‘single window’ clearance for all their projects. No doubt, measures are being taken at the state level, but there is a need for more. For instance, the government must utilize technology to connect the regulatory authorities at the central, state, and Urban Local Bodies levels. This will make the approval process more transparent, simpler and quicker, thereby benefiting the real estate sector and keeping property prices in check. While the government implemented the uniform tax system of GST in 2017, this is not enough. These taxes and statutory levies in real estate transactions account for nearly 30-35% of the total property cost and need further streamlining.
- Give a big push to rental housing: The number of unsold homes in India is staggering, which is illogical because there is also a major housing shortage. One of the ways to use this unsold housing inventory is to use it in government-supported rental housing schemes. For this, the draft National Rental Housing Policy needs to be expedited and enforced at the central and state levels.
- Digitise land records: The government must digitize all land records for greater efficiency and more transparency. This process has already been initiated, but it must be fast-tracked as it will ultimately help reduce land-related litigation issues and significantly benefit the sector.
- Help construction workers: Real estate and construction will require over 66 million workers over the next few years. The workforce shortage is enormous, mainly because the pandemic caused countless migrant workers to go back home and not return to construction sites. The scarcity of skilled labour causes project delays. CREDAI members have taken several steps to aid and empower their construction labourers. Still, the government must intervene strongly with sound policies that benefit construction workers and safeguard their overall wellbeing at every level.
Meanwhile, real estate developers must also shoulder their share of responsibility and contribute further to the growth and prosperity of the real estate sector. Developers can do their bit in four main areas:
- Increase professionalism: With increasing competition and rising consumer expectations, more developers must become professional and disciplined in their project delivery. Timely project execution is the major challenge today, so developers must become more efficient and organized and adopt global best practices to stay relevant.
- Understand and cater to consumers’ ‘real’ needs: It is not enough to chant the ‘customer is king’ mantra – it must become the guiding philosophy for every developer, without exceptions. Customers must be kept at the center of all decisions that developers make. The idea is to serve consumers with better products and help make the sector as a whole a more sustainable industry in the long run.
- Adopt modern construction techniques: Developers need to keep pace with and implement the latest construction technologies because they result in faster delivery of higher-quality projects. Today’s prominent technologies are automated MIS systems, building information modeling (BIM), Alu-Form construction, and lean project management, among others. Developers need to leverage technology to optimize costs, ensure active monitoring and optimize project integration.
- Comply wholeheartedly with all regulatory norms: While RERA has been implemented, it is still necessary that developers comply with the regulatory norms as per their state policy. For the sector to flourish in the long run, developers must follow all the stipulated development procedures and processes.